How the calculation works
Estimated cash released = annual credit sales ÷ 365 × (current DSO − target DSO).
A worked example
Annual credit sales of 365,000 and a reduction from 45 to 30 days imply 15,000 less tied up in receivables.
Use the result carefully
This is a steady-sales scenario, not guaranteed cash or additional profit. A higher target produces a negative result: more cash tied up.